It is a pleasure to join you here in Wellington,
at Victoria University’s Institute for Governance and
Policy Studies. My thanks go to Professor Jonathan Boston
for organising for me to be here, and to the University for
hosting the event.

The topic of my lecture is Improving
Global Governance: Making global institutions fit-forpurpose
in the 21st century. I will

• comment on some of the
complex challenges of the 21st century which cry out for
effective global governance reflecting today’s
geopolitical and other realities; and • examine whether
global governance institutions – particularly in the areas
of peace and security, economic governance, sustainable
development, and climate change – have kept up with
geopolitical changes and been able to tackle emerging
challenges to ensure their continued effectiveness,
legitimacy, and accountability.

My working definition of
global governance will be that of Lawrence Finkelstein,
former Professor of Political Science at Northern Illinois
University and former Vice-President of the Carnegie
Endowment for International Peace. Writing in 1995, in the
first issue of the journal Global Governance, he
suggested that global governance could be defined as
“governing, without sovereign authority, relationships
that transcend national frontiers. Global governance is
doing internationally what governments do at
home.”1

Finkelstein suggested that use of the term
global, rather than that of intergovernmental or
transnational, enables discussion to embrace consideration
of the roles of both traditional state actors and
nongovernmental actors. The latter category can include
global NGO and civil society networks, the private sector,
academic and research institutions, and the philanthropic
foundations, all of which play a role in advocacy around
global issues and in proposing solutions to cross-border
challenges.

Finkelstein wrote of governance as an
activity which includes not only setting rules and
regulations, but also influencing behavior through the
promulgation of principles and norms, the exchange of
information, and the provision of assistance. He noted that:
“If we need to institutionalize it, we must say the
institution in question is a means of governance, a
governance organization or agency, or an actor in
governance.” The UN plays a very significant role in
these respects through the large body of treaties,
conventions, and review mechanisms for which its individual
organisations are responsible.

1 Finkelstein, L.S.
“What is Global Governance?” Global Governance 1
(1995), 367-72 2 Complex challenges requiring effective
global governance1. At the turn of this century,
world leaders met in New York for the Millennium Summit.
They pledged their continued faith in the United Nations,
noting that: “We reaffirm our commitment to the
purposes and principles of the Charter of the United
Nations, which have proved timeless and universal. Indeed,
their relevance and capacity to inspire have increased, as
nations and peoples have become increasingly interconnected
and interdependent.”Indeed we do live
in an era of unprecedented globalization and
interdependence, where global public goods cannot be secured
and protected by any one nation alone, and where emerging
threats and challenges require co-ordinated responses.

The
United Nations Millennium Declaration of 2000 acknowledged
that a central challenge of this century is to ensure that
globalization becomes a positive force for all the world’s
peoples. Now, four years after the beginning of the global
financial crisis, the risks posed by the way in which
economic and financial integration has proceeded are clear
for all to see. At UNDP, we are acutely aware of how a
crisis generated in the markets of the north spread to all
corners of the earth, affecting the poorest and most distant
nations which saw weaker demand and lower prices for their
exports, higher volatility in capital flows and commodity
prices, and lower remittances. Greater global financial
stability is unlikely to be achieved in the absence of more
co-ordination of financial regulation and oversight.

We
see many other trans-border challenges too, which require
stepped up global responses - from global warming, to the
spread of pandemics, cyber-war and transnational crime,
trade barriers, and the flow of refugees and other
migrants.

All these challenges tend to hit those who have
the least power and voice to influence solutions, the
hardest. For example,

• Least developed countries and
small island developing states have done the least to cause
climate change, and can least afford the costs of adaptation
and mitigation to it, but they are most at risk from
increased climate volatility. • The poorest countries
also bear the brunt of the stalemate in the WTO’s Doha
Round. They have the most to gain from accessing currently
protected markets, and they have fewer – if any – cards
to play in bilateral trade negotiations. • Transnational
crime, particularly trafficking in persons, impacts on poor
women and girls the most – yet women are heavily
under-represented in border control, police, and
prosecution structures. As the challenges requiring global
responses have expanded, so too has the range of state and
non-state actors seeking influence on global
decisions.

The rise of the large emerging economies is of
particular significance, as their economic power and reach
provides a firm foundation for greater geopolitical reach.
The Managing Director of the IMF, Christine Lagarde,
commenting at the 2012 annual meeting of the IMF and World
Bank Group in Tokyo on the economic aspects of these trends,
noted that, “Economic power is spreading from west to
east, and prosperity has begun to move from north to
south.”The evidence of this shift of
economic power is clear:

• According to the IMF, in
2007, emerging markets accounted for 25 per cent of GDP and
seventeen per cent of world debt. By 2016, they are expected
to produce 38 per cent of world output and account for
fourteen per cent of world debt; • UNCTAD’s analysis
shows South-South trade increasing dramatically, growing on
average by twelve per cent per year from 1996 to 2009, which
is fifty per cent faster than the growth in North-South
trade, and now accounting for twenty per cent of global
trade; • Countries of the South also dramatically
increased their share of global inward foreign direct
investment, from twenty per cent to fifty per cent of the
total between 1980 and 2010.

UNDP’s next Human
Development Report examines the rise of the South and the
implications of that for human development.

For example,
alongside the growth in the size of developing country
economies, there is significant growth in South-South
development co-operation – not only in the form of grants,
technical assistance, and loans, but also through the
exchange of knowledge, innovation, and best practice.

In
a recent paper, however, Professor Robert Wade of the London
School of Economics issues a warning that the world may be
moving towards “multipolarity without multilateralism”,
as “economic weight and influence in governance are
different things”, and that established states may not
wish to compromise with newcomers – and vice-versa2.
Without stronger and more representative global governance
institutions, emerging powers may look increasingly to
pursue their interests through alternative – regional,
bilateral, or unilateral – mechanisms.

Calls for reform
of international institutions generally highlight the
inconsistency between the current structures which reflect
the economic and political realities at the end of World War
II, and the vastly different realities of today.

So how
are global governance institutions performing currently, and
what needs to change? 2 Wade, R.H. “Emerging World Order?
From Multipolarity to Multilateralism in the G20, the World
Bank, and the IMF” Politics & Society 39(3) (2011):
347- 378

2. Ensuring global governance institutions are
fit-for-purpose in the 21st century It is not difficult to
draw up an inventory of global institutions and mechanisms
which are struggling to reach decisions:

• The veto
power in the UN Security Council can be a block to decisive
action. • The annual meetings of the Conference of the
Parties (COP) to the United Nations Framework Convention on
Climate Change have often struggled to reach agreement. •
The UN Commission on the Status of Women failed to produce
an agreed outcome this year. • The Commission on
Sustainable Development ended its nineteenth session, in May
2011, unable to agree on policy decisions on practical
measures to advance chemical and waste management, transform
transport and mining practices, and establish a long-awaited
10-Year Framework of Programmes for sustainable consumption
and production patterns. • The Rio+20 UN Conference on
Sustainable Development reached a consensus among member
states which fell well short of the level of ambition hoped
for by those who want to see decisive action. •
Negotiations in New York on the outcome document for the
Fourth UN Conference on Least Developed Countries, LDC-IV,
last year failed to reach agreement, and required late night
compromise to be reached in Istanbul. • The WTO Doha
Development Round launched in 2001 is stuck. •
Negotiations on the Declaration of UNCTAD XIII, the
quadrennial UNCTAD conference, which was held in Doha in
April this year, appear to have been particularly
acrimonious.

• The IMF quota reform negotiated in 2010
still has to be accepted under the rules requiring 85 per
cent of the voting power to approve it.

In some cases, the
reasons for paralysis, minimal outcomes, or failure to reach
agreement are structural – as with the veto in the UN
Security Council, and with other bodies where agreements
require full consensus. But also at play in general are the
changing geopolitics of our times, as the relative power and
economic balances change, and the voice of the South demands
to be heard as never before. Multilateralism needs goodwill
and dialogue across groupings to be successful, but that is
not always to be found in abundant quantities.
Notwithstanding the difficulties, the United Nations with
its universal membership enjoys enormous legitimacy and
continues to have great convening power.

In late
September, more than 100 Heads of State or Government and
seventy Deputy Prime Ministers or Ministers participated in
the General Debate of the 67th UN General Assembly.
High-level meetings, formal and informal, were convened on a
wide range of pressing issues from the food and security
crisis in the Sahel to events in Somalia, Democratic
Republic of Congo, Syria, and Yemen, and on important areas
in development such as expanding the rule of law, achieving
education for all, scaling up nutrition, and preventing
maternal deaths.

In his closing remarks in the General
Debate, the President of the General Assembly, noted that
“this Organization will only be as strong as the
membership chooses to make it.” The UN membership of
course is composed of member states – while the UN Charter
begins with the words: “We the Peoples”. Increasingly
the UN’s Secretariat, agencies, funds, programmes, and
treaty bodies are interacting directly with civil society
networks and private sector organisations with a shared
vision for what a better world could be. These non-state
actors can also be powerful voices in moving global agendas
forward, including perhaps in the future on reform of global
governance institutions.

Let me now discuss some of the
multilateral institutions and processes in a little more
detail, looking at where reform could usefully occur, and
at where it already has with some success.

A. The UN
Security CouncilThe conflict in Syria and the
stalemate in the Security Council over how to address it
make the issue of reform of the UN Security Council a timely
one. Around the world, people are exposed to media reporting
of the human toll of the Syrian crisis, and are asking why
the UN cannot act to protect innocent civilians. The same
questions were asked about the inability of UN peacekeeping
missions to act in Rwanda and Bosnia in the 1990s.
Discussion on reform of the Security Council has proceeded
in fits and starts for years, with a focus on two issues:
• the out-of-date membership structure, and • the
question of the veto held by the five permanent members,
which is a key concern in relation to decision-making now
over Syria.

New Zealand opposed the veto power from the
time of the writing of the UN Charter. At the General
Assembly in September this year, the Minister of Foreign
Affairs called on the five permanent members of the Security
Council to accept restrictions on the use of veto
voluntarily, noting that the veto was originally intended
only for the protection of vital national interests. Murray
McCully was one among many at the General Debate this year
who highlighted the importance of ongoing revitalization of
the UN, including reform of the Security Council, for the
future credibility of the organization.

It is seldom that
those holding power voluntarily cede it, which has always
made reform of the veto power a tall order. Discussion on
the expansion of the Security Council so that it reflects
today’s geopolitics, however, could make more
progress.

New Zealand itself is seeking a non-permanent
seat on the Security Council for 2015–16. The elections
for these seats are hard fought, because of the desire of
many member states to play a role in the UN’s most
powerful organ. That organ could be more effective with
reform.

That reform, when it comes, needs to be designed
for flexibility, so that twenty years from now the global
community will not need to repeat the current discussion
about the Council not representing geopolitical
realities.

B. The Human Rights
CouncilAn example of a successful UN
reform in my view has been the creation of the Human Rights
Council. It replaced the sixty-year-old Human Rights
Commission, which had suffered from a lack of
credibility.

The new, smaller Human Rights Council
introduced the Universal Periodic Review as a
mechanism for peer review of the state of human rights in
member states. All member states report to the Council
accordingly, and the views of non-state actors are heard.
UNDP has played a role in supporting countries to prepare
their reports, and to follow up on the recommendations made
by the Council. This mechanism is having a positive impact
on upholding human rights.

C. Institutions of financial
and economic governanceThe global
financial crisis of the past four years has highlighted the
absence of credible and strong global mechanisms for
co-ordination of responses.

In this vacuum, the
pre-existing G20, designed for finance ministers and central
bankers, was ‘upgraded’ to a higher level when
President George W. Bush called for a meeting of G20 leaders
for the first time in 2008. While the G20 is an informal
inter-governmental grouping, any summit exclusive to leaders
of many of the world’s leading economies is of global
interest. From the outset therefore, the G20 faced
challenges, as others affected by agreements it reached
lacked a direct voice in the decision making. A Global
Governance Group (3G) was convened by Singapore at the UN in
New York to express the views of smaller states about how to
engage with the G203. New Zealand is associated with this
group.

While it was clear from President Obama’s
statements at Pittsburg and from the related Communique
that the G20 nations should see the grouping as the
premier vehicle for their economic co-ordination,
“their” has often been dropped in references to the
group, leading to it being seen as positioning itself as the
world’s premier vehicle for economic coordination. The
agreements it has reached appear to have come close to
directing the work of formal multilateral institutions which
have their own governance structures.

Robert Wade, wrote,
for example that G20 leaders “boldly announced their
intention to make themselves the global economic steering
committee.”

3 Chowdhury, I.A., “The Global Governance
Group (3G) and Singaporean Leadership: Can Small Be
Significant?” Institute of South Asian Studies. Working
Paper, No 108, 19 May 2010 4 Wade, R.H, ibid. pg 355. 7 He
points to the communiqué of the second summit (London,
April 2009) in which G20 leaders stated that: “We are
determined to reform and modernize the international
financial institutions to ensure they can assist members and
shareholders effectively in the new challenges they face. We
will reform their mandates, scope, and governance to reflect
changes in the world economy and the new challenges of
globalization, and that emerging and development economies,
including the poorest, must have greater voice and
representation.”5Leaving aside the
irony of the G20 calling for greater voice and
representation for the poor, Robert Wade notes that G20
critics have questioned what authority G20 leaders have to
supersede the governing bodies of the IMF and the World
Bank, and to call not only for a change in voting shares,
but also to designate, broadly, what the details of the
change should be.

Years before the G20 called for reform
of the Bretton Woods institutions, the outcome document of
the International Conference on Financing for Development in
Monterrey in 2002, recognized important efforts to reform
the international financial architecture, and called for
more “transparency and the effective participation of
developing countries and countries with economies in
transition”.6 This was echoed at the 2009 United Nations
Conference on the World Financial and Economic Crisis and
its Impact on Development. In 2010, both the International
Monetary Fund and the World Bank agreed on reforms to their
governance structures, to make the organizations more
fit-for-purpose in the 21st Century.

For the IMF, the
reforms agreed include a shift of six per cent in quota
shares from overrepresented countries to under-represented
member countries, including dynamic emerging market and
developing countries. This will have the effect, when
implemented, of placing Brazil, China, India, and Russia for
the first time all among the top ten IMF shareholders. The
USA alone has accounted for around seventeen per cent of
votes at the Fund. It has been the only single country to
have effective veto power on all major decisions at the
Fund, including on approval of the quota reform which
requires 85 per cent of the total voting power to be
reached. Some have suggested that the US election campaign
has accounted for the delay in completing the IMF reform –
if so, there will be an expectation that the reform moves
forward soon.

The
US shareholding does not change significantly with the
reform, as it would keep its veto power. Rather it is the
European Union member states who are mainly losing shares
and seats at the IMF Executive
Board.For the World Bank, reforms in
2010 expanded on previous reforms agreed upon in 2008.
These relate not only to increasing voice and participation,
but also to increasing transparency and access to
information, promoting accountability and good governance,
improving risk management, and reviewing internal
governance.

The G20 also spurred the creation of the
Financial Stability Board, following the 2009 London Summit,
where they agreed to “establish a new Financial
Stability Board (FSB) with a strengthened mandate, as a
successor to the Financial Stability Forum (FSF), including
all G20 countries, FSF members, Spain, and the European
Commission”. At the G20 Los Cabos Summit in June 2012,
Leaders endorsed the recommendations and the revised Charter
of the Financial Stability Board (FSB) which includes
strengthened governance, greater financial autonomy and
enhanced capacity to co-ordinate the development and
implementation of financial regulatory policies.

Countries
of the South have also called for the UN to have a
strengthened role in global economic governance, including
through a more robust Economic and Social Council (ECOSOC)
and better co-ordination between the UN, the BWIs, and the
G20. D. Economic and Social Council (ECOSOC) and new
governance structures for sustainable development In
2005, then UN Secretary General Kofi Annan, issued a report,
In Larger Freedom: Towards development, security, and
human rights for all, in which he highlighted the need
for reform to strengthen the UN system, including
ECOSOC.

There he proposed the establishment of Annual
Ministerial Review (AMR) assessments of progress towards
agreed development goals, particularly the MDGs, and the
high-level Development Co-operation Forum (DCF), as new,
formalized mechanisms of ECOSOC. Following the 2005 World
Summit at the UN, the General Assembly adopted resolution
61/16 on the “Strengthening of the Economic and Social
Council”, recognizing ECOSOC as a “principal body for
co-ordination, policy review, policy dialogue, and
recommendations on issues of economic and social
development”, and mandating the AMR and the DCF. Both of
these mechanisms, launched in 2007, have given ECOSOC
greater weight: the former raising the level of debate on
international development to the ministerial level, and the
latter ensuring that a broad range of actors can engage with
each other in a high-level dialogue on development
co-operation.

As a UN platform, the DCF has been viewed as
more inclusive than the aid effectiveness fora associated
with the OECD’s Development Assistance Committee. 9 But
now those OECD-associated fora are also being transformed
with the outcome of the Fourth High Level Forum on Aid
Effectiveness, which took place in Busan, and the launching
of the Global Partnership for Development Effectiveness. It
aims to provide a new platform for dialogue between the DAC
donors and developing countries, including the South-South
development co-operation partners.

Along with the reform
of ECOSOC, agreement was reached at Rio+20 to establish a
universal membership, intergovernmental, high-level
political forum for sustainable development at the UN. It
should build on the strengths, experiences, resources, and
inclusive ways of working of the current Commission on
Sustainable Development, which it would replace. An
intergovernmental process will define the features of the
new forum, which is expected to convene at the beginning of
the 68th session of the General Assembly in September
2013.

UNDP advocated in the lead up to Rio+20 for a new
Sustainable Development Council, either to replace ECOSOC
or as a stronger subsidiary body to it than the existing
Commission has been. We believed that it could benefit from
having a peer review mechanism, to encourage countries to
act on sustainable development in line with the commitments
they make.

This is a question of relevance and
effectiveness. The collective of member states is making too
little progress on ensuring the future sustainability of our
world’s ecosystems. Fine words in outcome documents need
to lead to action. It is depressing, yet at the same time
encouraging, that the dynamism around sustainable
development at Rio+20 was coming for the most part from
sub-national governments, NGOs and civil society, and the
private sector – notwithstanding some impressive actions
by individual member states. That is why it is becoming so
important for the voices of non-state actors to be heard in
global governance fora.

E. Global Climate
GovernanceOne of the most visible 21st century
challenges is that of climate change. Co-ordinated action to
combat global warming is badly needed, and the risks from
failing to tackle the problem effectively are
high.

Multilateral action centres on the 1992 United
Nations Framework Convention on Climate Change and its
associated Kyoto Protocol (1997), both of which have been
ratified by almost all nations. The Bali Roadmap from COP-13
in 2007 and the Durban Platform from COP-17 last year have
attempted to set firm timelines for reaching agreement on
further measures for a new global agreement.

Negotiations
have been far from smooth, with many items over the years
postponed for consideration at future sessions, and climate
negotiations often seeming to fail, or be held hostage to a
myriad of interests and positioning. As with a WTO round,
consensus is required for decisions to be reached – or at
least near consensus as established at Cancun.

To any
casual observer, the negotiations seem protracted, while the
need for action becomes ever more pressing. It would be a
tragedy for future generations if today’s leaders and
decision makers prove incapable of taking the bold decisions
which are necessary to stop catastrophic and irreversible
change to the world’s climate.

The limited
accountability mechanisms available for agreements reached,
and the lack of meaningful consequences for non-compliance,
have also been raised as obstacles to progress on a new
climate agreement.

Another concern around the global
climate change architecture is that of fragmentation. Both
within the UN and beyond, there are a number of new
institutional mechanisms, and platforms for negotiation.
Critics of this fragmentation have argued that agreements
reached by only some countries are inherently
flawed.

Meanwhile, at the sub-national level of
governance, we see useful developments – for example with
cities co-operating as part of the C-40 network to bring
about local change through policies for transportation and
urban planning which will both reduce emissions and
encourage adaptation to the climate change already affecting
our lives.

Also, there is room for optimism associated
with the expected large increase in the volume of climate
finance available. Some of the ten billion USD per year
which developed countries pledged at Copenhagen for
low-emissions and climate resilient development from 2010 to
2012 has been delivered. By 2020 developed countries have
committed to raising US$100 billion in climate finance
annually. That would create an even larger base from which
to leverage large scale private investment for climate
change adaptation and mitigation in developing
countries.

UNDP has long supported countries to overcome
barriers to attracting investment. We are now applying this
experience to help countries build the capacities necessary
to access climate finance and navigate through the plethora
of diverse funding sources. Overall, climate finance is now
accessible through more than fifty international public
funds, sixty carbon markets and six thousand private equity
funds.

Without strengthened capacities too many localities
and countries will be left out, unable to tap the upfront
resources needed to leverage private investment and put
sustainable development into practice.

ConclusionIn
providing a detailed account of some of the successful, and
at times less successful, reform efforts of multilateral
institutions and processes, I have considered different
elements which I believe are essential to make global
governance institutions ‘fit-for-purpose’ in the 21st
century.

• First, efficiency and
effectiveness;I have argued that global
institutions are critical for co-ordinated action to tackle
the most pressing challenges of our era – whether they be
climate change, peace and security, or economic volatility.
Outdated structures and functions, such as the UN Security
Council veto, can undermine efficient and effective
co-operation.

• Second, legitimacy and
transparency;I have suggested that much more can
be done to ensure that global institutions are
representative and inclusive, and that they function in a
manner which reflects the geopolitical realities and
economic dynamics of the 21st century. The ongoing reforms
at the IMF, the WB, and other institutions, are moving in
the right direction for greater inclusiveness and
transparency. A reformed ECOSOC which attracted finance
ministers to its proceedings would also give the UN a more
effective forum and voice on economic and financial
issues.

• Finally, accountability and
fairness;Here the key question is whether global
institutions give voice and decision-making power to those
most impacted by global challenges – often the poorest and
most vulnerable, and whether recipients of support are
enabled to hold these institutions to account. Not enough
attention is being placed on these issues, but increasingly
global civil society and others will demand that reform
agendas take them into account.

Overall, there can be no
doubt that progress has been made to enable global
institutions to be more fit-for-purpose. So far, however,
not enough has been done across the three dimensions I have
outlined to ensure optimal functioning of a range of
institutions at a time when unprecedented cross-border
challenges require improved global governance.

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